Starting in January of 2012 PECO Energy Co. (PECO) has begun phasing the power utility’s most popular discounted heating rate.

The Philadelphia-based electric utility is phasing out its discounted RH heating rate. The RH provides a discount of about 45 percent to customers who consume more than 600 kilowatt-hours per month during the winter, which PECO said helps its RH customers lower electric bills by an average of about 5 percent a year.

The discounts on these rates will be cut in half on Jan. 1, 2012 and will be eliminated totally by the end of 2012.

This means that for all usage over 600 kWh the price will go from $0.0548 / kWh to $0.0700 / kWh starting with the January 1, 2012 billing.

PECO said it was ending the discounted rates as required by the Pennsylvania Public Utility Commission (PUC). The discounted rates were put into place decades ago to encourage Pennsylvanians to switch to electric heating. But then electric deregulation allowed competing alternative electric suppliers to enter the market and sell electricity to electric customers in PECO’s service territory.

The good news is that starting January 1st the price for the first 600 kWh has decreased by about 12% from $0.1045 / kWh to $0.0927 / kWh.

This means that any residential customer billed under the PECO RH rates will see a decrease in your electric charges up to 915 kWh. This is considered to be the break-even point where any usage over this number you will see an increase in your charges.

Regarding the decrease coming for PECO Residential Heating, non-heating, and commercial customers PECO issued a press release stating the following:

“Electric commodity costs fluctuate – either increasing or decreasing – based on many factors including wholesale prices when purchases are made, the amount of wholesale electricity purchased, the length of contracts, weather, reconciliation of collections for actual versus forecasted energy use, and other calculations.　 Based on this adjustment, bills for a typical residential customer – not purchasing their electricity from a competitive electric generation supplier – will decrease about 6.6 percent or about $6.10 a month for the first quarter beginning on Jan. 1, 2012.　

Electric commodity costs for business customers also vary based on the total amount of energy they use and their energy usage patterns.　 Beginning Jan. 1, 2012, prices for small business customers not purchasing their electricity from a competitive supplier will decrease about 9 percent and prices for large business customers not purchasing their electricity from a competitive supplier will decrease about 2.9 percent.”